Tuesday, July 31, 2007

Nuclear Waste Hits Milwaukee

The term "nuclear waste" is used to describe mortgages gone bad. It's now spread to the corner of Kilbourn and Water in Milwaukee.

The nation's subprime mortgage problems slammed into Milwaukee-based mortgage insurance giant MGIC Investment Corp. and its partner, which announced Monday they might have to write off their entire $1.03 billion investment in a company that backs such loans.

"MGIC has not determined the range of an impairment charge, although the upper boundary of the range could be MGIC's entire investment," the company said.

"I am not surprised that companies with subprime exposure, whether it be through an entity like this or a direct investment, are having trouble," said Terence Pavlic, president of Pavlic Investment Advisors Inc., Delafield. "When somebody is writing off up to $500 million, that is usually bad. It means something went wrong and value is being destroyed."

It doesn't take an investment advisor to point out that $500 million is a lotta bucks.


GOR said...

You've got to love how bankers mince words. The paltry $1 billion is not a 'loss' or 'money down the toilet'. Nooo...it is an "impairment charge".

I'm so reassured to hear that...

Dad29 said...

To be fair that's a CPA term, and perhaps required by CPA standards.

Of course, CPAs are no slouches at artful language, either--just like lawyers.

The proper terminology here is "We're F&^%d, but we don't know how bad, yet."

GOR said...

Yes Dad, so my wife (who is in accounting) also informs me. I was just thinking of trying that with Wisconsin Energy.

"Dear WE: I had an impairment charge at Potawatomi last Friday night and won't be able to pay my electric bill. I'm sure you understand. Stuff happens..."

Yeah, right!